Faceless assessment jurisdiction under Section 151A/144B inapplicable to notices issued before scheme notification; assessment invalidated

ITAT Kolkata considered whether the National Faceless Assessment Centre validly assumed jurisdiction under the faceless assessment provisions for proceedings begun before the scheme was notified as effective. The tribunal held that although Section 151A was enacted earlier, the faceless assessment scheme became operative only upon the statutory notification; notices and assessments issued by NFAC prior to that notification were therefore without jurisdiction and unsustainable. The tribunal relied on a prior like decision of the same bench to conclude the impugned faceless assessment could not be sustained.

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Issues: (i) Whether the National Faceless Assessment Centre (NFAC) validly assumed jurisdiction under Section 151A read with Section 144B of the Income-tax Act, 1961 to issue notices and frame assessment for A.Y. 2015-16 prior to the date on which the faceless assessment scheme was made effective by notification.

Analysis: The Court examined the timeline of statutory enactment and notification, namely that Section 151A was inserted into the statute with effect from 01.11.2020 but the faceless assessment scheme under Section 151A was notified and made effective by Notification No.18/2022 on 29.03.2022. The facts on record show issuance of notice under Section 142(1) dated 09.02.2022 and a show-cause notice dated 17.03.2022 by NFAC, followed by an assessment order dated 23.03.2022. The Bench considered that the question is purely legal, requiring no further factual inquiry, and applied relevant authority recognising that administrative action under a statutory scheme is effective only when the scheme is duly notified and operative. The Tribunal also noted consistent approach in a related decision where similar pre-notification action by NFAC was held without jurisdiction.

Conclusion: The NFAC's assumption of jurisdiction and the assessment proceedings conducted and order passed prior to the effective date of the faceless assessment scheme (29.03.2022) are without jurisdiction; the assessment order is quashed and the appeal is allowed in favour of the assessee.

Ratio Decidendi: A faceless assessment under Section 151A of the Income-tax Act, 1961 can be validly exercised only after the faceless assessment scheme is made operative by the competent notification; actions taken under that scheme before the notification date are jurisdictionally invalid.

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